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EXHIBIT 10.12
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is made as of the 25th day of
January, 2000, by MigraTEC, Inc., a Florida corporation ("Debtor"), whose
address is ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ in favor of
each of MT Partners, L.P., whose address is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and Mercury Ventures, Ltd., a Texas limited partnership,
whose address is ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(collectively with their respective successors and assigns, "Secured Party").
Debtor hereby agrees with Secured Party as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the meanings indicated below:
(a) The term "Code" shall mean the Texas Business and Commerce
Code as in effect in the State of Texas on the date of this Agreement
or as it may hereafter be amended from time to time.
(b) The term "Collateral" shall mean all of the property set
forth below (as indicated):
(i) any right to payment for services rendered or for
goods sold or leased which is not evidenced by an instrument
or chattel paper, whether or not it has been earned by
performance ("Accounts"), and all customer lists, subscription
lists, invoices, agings, verification reports and other
records relating in any way to such Accounts, and all of
Debtor's rights in, to and under all purchase orders or
contracts now owned or hereafter received or acquired by it
for goods or services, and all of Debtor's rights to any goods
represented by any of the foregoing (including returned or
repossessed goods and unpaid seller's rights) and all moneys
due or to become due to Debtor under all contracts for the
sale or lease of goods and/or the performance of services by
it (whether or not yet earned by performance) or in connection
with any other transaction, now in existence or hereafter
arising; all promissory notes, drafts, bills of exchange,
instruments, documents and trade acceptances (collectively,
"Instruments"); all deposit accounts, general intangibles, tax
refunds and other obligations of any kind owing to Debtor
(including under any trade names), now or hereafter existing,
arising out of or in connection with the sale or lease of
goods or the rendering of services or otherwise (including,
without limitation, any such obligations that would be
characterized as an account, general intangible or chattel
paper under the Code); and all rights now or hereafter
existing in and to all security agreements, leases, guarantees
and other contracts securing or otherwise relating to any such
Accounts, Instruments, deposit accounts, general intangibles
or obligations;
(ii) all machinery, equipment, tools, apparatus,
furniture and leasehold improvements, now owned or hereafter
acquired by Debtor or in which Debtor now has or hereafter may
acquire any right, title or interest, and any and all
additions, substitutions and replacements thereof, wherever
located, together with all attachments, components, parts,
equipment and accessories installed therein or affixed
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thereto, including but not limited to all "equipment" as
defined in Section 9.109(2) of the Code;
(iii) all writings which evidence both a monetary
obligation and a security interest in or a lease of specific
goods;
(iv) all contracts and agreements to which Debtor is
a party or to which Debtor has any rights, together with all
modifications, amendments or replacements of any of the
foregoing, including, without limitation, (A) all rights of
Debtor to receive moneys due and to become due to Debtor
thereunder or in connection therewith, (B) all rights of
Debtor to damages arising out of, or for, breach or default in
respect thereof and (C) all rights of Debtor to perform and to
exercise all remedies thereunder;
(v) all general intangibles (as defined in the Code);
all inventions, processes, production methods, proprietary
information, trade secrets and know-how; all patents and
applications for patents, copyrights, trademarks, trade names,
corporate names, company names, business names, fictitious
business names, trade styles, service marks, logos and other
source or business identifiers, and the goodwill associated
therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and
Trademark office or in any similar office or agency of the
United States, any State thereof or any other country or any
political subdivision thereof, or otherwise and all renewals
thereof, and all licenses or other agreements granted to
Debtor with respect to any of the foregoing; all information,
customer lists, advertising lists, advertising contracts,
identification of suppliers, data, plans, blueprints,
specifications, designs, drawings, recorded knowledge,
surveys, engineering reports, test reports, manuals, materials
standards, processing standards, performance standards,
telephone numbers and telephone listings, catalogs, books,
records, computer and automatic machinery software and
programs, and the like pertaining to operations by or the
business of Debtor and all licenses with respect thereto; all
field accounting information and all media in which or on
which any of the information or knowledge or data or records,
may be recorded or stored and all computer programs used for
the compilation or printout of such information, knowledge,
records or data; all licenses, consents, permits, variances,
certifications and approvals of all Governmental Authorities
now or hereafter held by Debtor pertaining to operations or
business now or hereafter conducted; all rights to receive
return of deposits and trust payments; all rights to payment
under letters of credit and similar agreements; all tax
refunds (including, without limitation, all federal and state
income tax refunds and benefits of net operating loss carry
forwards); and all causes of action, rights, claims and
warranties now or hereafter owned or acquired by Debtor;
(vi) all rights, claims and benefits of Debtor
against any person arising out of, relating to or in
connection with the Collateral;
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(vii) the balance of every bank account and deposit
account of Debtor and any other claim of Debtor against
Secured Party, now or hereafter existing, liquidated or
unliquidated, and all money, instruments, securities,
documents, chattel paper, credits, claims, demands, income,
and any other property, rights and interests of Debtor which
at any time shall come into the possession or custody or under
the control of Secured Party or any agent, affiliate or
correspondent of Secured Party, for any purpose, and the
proceeds thereof (Secured Party shall be deemed to have
possession of any of the Collateral in transit to or set apart
for Secured Party or any of its respective agents, affiliates
or correspondents);
(viii) all equity interest in any entity, any debt
instrument issued by any person or entity and any instrument
convertible into any equity or debt interest (whether owned
beneficially or of record), including but not limited to all
shares of capital stock of whatever class, all partnership and
joint venture interests, and all debentures and debt
instruments (collectively "Securities"); all shares,
securities, monies or properties representing a distribution
on any Securities or representing a Distribution (defined
below) or return of capital upon or in respect of any
Securities or any part thereof, or resulting from a split-up,
revision, reclassification or other like change of the
Securities, or otherwise received in exchange therefor; all
subscription rights, warrants or options issued to the holders
of, or in respect of, the Securities; each certificate or
other instrument evidencing any of the foregoing;
(ix) any declaration or payment of any distribution
or dividend (including a stock dividend) on, or the making of
any pro rata distribution, loan, advance, or investment to or
in any holder (in its capacity as a partner, shareholder or
other equity holder) of, any partnership interest or shares of
capital stock or other equity interest of such entity; any
purchase, redemption, or other acquisition or retirement for
value of any shares of partnership interest or capital stock
or other equity interest of such entity; and any payments of
principal of, and interest on, and all other payments in
respect of any debt issued by any person or entity (all of the
foregoing being herein referred to as collectively
"Distributions");
(x) all accounts of Debtor maintained with or through
any other person or entity or persons or entities related to
the acquisition, ownership, sale or other disposition of any
interest in any security or interest in any security
(including but not limited to all interest in any equity or
debt security, option, warrant, put, call, futures agreements,
commodity agreements, margin accounts, short positions and
partnership interests), each deposit account (time, demand or
other) in which any proceeds of or income from the foregoing
may be on deposit, all general intangibles consisting of the
foregoing and each agreement, document or instrument governing
or evidencing any of the foregoing and all amendments and
restatements thereof, and all claims of Debtor against any
person or entity with respect to any of the foregoing;
(xi) all insurance policies and bonds and claims
relating to any of the Collateral and payments thereunder;
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(xii) all other personal property now owned of
hereafter acquired by Debtor, including, without limitation,
any and all inventory, documents, goods and other property in
which a security interest would be created under Chapter 9 of
the Code; and
(xiii) all accessions to, all substitutions for and
replacements of, and all proceeds and products of any and all
of the foregoing Collateral and, to the extent not otherwise
included, all (A) payments under insurance (whether or not
Secured Party is the loss payee thereof), or any indemnity,
warranty or guaranty, payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Collateral
and (B) all cash.
(c) The term "Indebtedness" shall mean (i) all indebtedness,
obligations and liabilities of Debtor to Secured Party now existing or
hereafter arising pursuant to those two certain promissory notes dated
January 25th, 2000, in the aggregate principal amount of $3,750,000.00
executed by Debtor and payable to the order of Secured Party (the
"Notes"), (ii) all obligations of Debtor to Secured Party under any
documents evidencing, securing, governing and/or pertaining to all or
any part of the indebtedness described in (i) above, (iii) all costs
and expenses incurred by Secured Party in connection with the
collection and administration of all or any part of the indebtedness
and obligations described in (i) and (ii) above or the protection or
preservation of, or realization upon, the collateral securing all or
any part of such indebtedness and obligations, including without
limitation all reasonable attorneys' fees, and (iv) all renewals,
extensions, modifications and rearrangements of the indebtedness and
obligations described in (i), (ii) and (iii) above.
(d) The term "Loan Documents" shall mean the Note and Warrant
Purchase Agreement dated even date herewith by and between Debtor and
Secured Party, the Notes and this Agreement.
(e) The term "Senior Debt" shall mean all indebtedness of
Debtor to MJ Capital Partners, L.P. and its affiliates.
(f) The term "Senior Lender" means MJ Capital Partners, L.P.
and its affiliates.
All words and phrases used herein which are expressly defined in Section 1.201
or Chapter 9 of the Code shall have the meaning provided for therein. Other
words and phrases defined elsewhere in the Code shall have the meaning specified
therein except to the extent such meaning is inconsistent with a definition in
Section 1.201 or Chapter 9 of the Code.
2. Security Interest. As security for the Indebtedness, Debtor, for
value received, hereby pledges and grants to Secured Party a continuing security
interest in the Collateral.
3. Maintenance of Collateral. Other than the exercise of reasonable
care to assure the safe custody of any Collateral in Secured Party's possession
from time to time, Secured Party does not have any obligation, duty or
responsibility with respect to the Collateral. Without limiting the generality
of the foregoing, Secured Party shall not have any obligation, duty or
responsibility to do
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any of the following: (a) ascertain any maturities, calls, conversions,
exchanges, offers, tenders or similar matters relating to the Collateral or
informing Debtor with respect to any such matters; (b) fix, preserve or exercise
any right, privilege or option (whether conversion, redemption or otherwise)
with respect to the Collateral unless (i) Debtor makes written demand to Secured
Party to do so, (ii) such written demand is received by Secured Party in
sufficient time to permit Secured Party to take the action demanded in the
ordinary course of its business, and (iii) Debtor provides additional
collateral, acceptable to Secured Party in its sole discretion; (c) collect any
amounts payable in respect of the Collateral (Secured Party being liable to
account to Debtor only for what Secured Party may actually receive or collect
thereon); (d) sell all or any portion of the Collateral to avoid market loss;
(e) sell all or any portion of the Collateral unless and until (i) Debtor makes
written demand upon Secured Party to sell the Collateral, and (ii) Debtor
provides additional collateral, acceptable to Secured Party in its sole
discretion; or (f) hold the Collateral for or on behalf of any party other than
Debtor.
4. Representations and Warranties. Debtor hereby represents and
warrants the following to Secured Party:
(a) Authority. The execution, delivery and performance of the
Loan Documents by Debtor have been duly authorized by all necessary
corporate action of Debtor.
(b) Accuracy of Information. All information heretofore,
herein or hereafter supplied to Secured Party by or on behalf of Debtor
with respect to the Collateral is true and correct.
(c) Enforceability. The Loan Documents constitute legal, valid
and binding obligations of Debtor, enforceable in accordance with their
respective terms, except as limited by bankruptcy, insolvency or
similar laws of general application relating to the enforcement of
creditors' rights and except to the extent specific remedies may
generally be limited by equitable principles and except as right to
indemnification may be limited by consideration of public policy.
(d) Ownership and Liens. Debtor has good and marketable title
to the Collateral free and clear of all liens, security interests,
encumbrances or adverse claims, except for the security interest
created by this Agreement and those securing the Senior Debt. No
dispute, right of setoff, counterclaim or defense exists with respect
to all or any part of the Collateral. Debtor has not executed any other
security agreement currently affecting the Collateral and no effective
financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any recording office except
as may have been executed or filed in favor of Secured Party and those
executed and filed in favor of Senior Lender.
(e) No Conflicts or Consents. Neither the ownership, the
intended use of the Collateral by Debtor, the grant of the security
interest by Debtor to Secured Party herein nor the exercise by Secured
Party of its rights or remedies hereunder, will (i) conflict with any
provision of (A) any domestic or, to Debtor's knowledge, foreign law,
statute, rule or regulation, (B) the articles of incorporation or
bylaws of Debtor, or (C) any agreement, judgment, license, order or
permit applicable to or binding upon Debtor, or (ii) result in or
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require the creation of any lien, charge or encumbrance upon any assets
or properties of Debtor or of any person except as may be expressly
contemplated in the Loan Documents. Except as expressly contemplated in
the Loan Documents, no consent, approval, authorization or order of,
and no notice to or filing with, any court, governmental authority or
third party is required in connection with the grant by Debtor of the
security interest herein or the exercise by Secured Party of its rights
and remedies hereunder.
(f) Security Interest. Debtor has and will have at all times
full right, power and authority to grant a security interest in the
Collateral to Secured Party in the manner provided herein, free and
clear of any lien, security interest or other charge or encumbrance
other than those liens and security interests securing the Senior Debt.
This Agreement creates a legal, valid and binding security interest in
favor of Secured Party in the Collateral securing the Indebtedness.
Possession by Secured Party of all certificates, instruments and cash
constituting Collateral from time to time and/or the filing of the
financing statements delivered prior hereto and/or concurrently
herewith by Debtor to Secured Party will perfect and establish Secured
Party's security interest hereunder in the Collateral.
(g) Location. Debtor's residence or chief executive office, as
the case may be, and the office where the records concerning the
Collateral are kept is located at its address set forth on the first
page hereof. Except as specified elsewhere herein, all Collateral shall
be kept at such address.
(h) Exclusion of Certain Collateral. Unless otherwise agreed
by Secured Party, the Collateral does not include any aircraft,
watercraft or vessels, railroad cars, railroad equipment, locomotives
or other rolling stock intended for a use related to interstate
commerce.
(i) Inventory. The security interest in the inventory shall
continue through all stages of manufacture and shall, without further
action, attach to the accounts or other proceeds resulting from the
sale or other disposition thereof and to all such inventory as may be
returned to Debtor by its account debtors.
(j) Accounts. Each account represents the valid and legally
binding indebtedness of a bona fide account debtor arising from the
sale or lease by Debtor of goods or license by Debtor of software or
the rendition by Debtor of services. The amount shown as to each
account on Debtor's books is the true and undisputed amount owing and
unpaid thereon, subject only to discounts, allowances, rebates, credits
and adjustments to which the account debtor has a right.
(k) Chattel Paper, Documents and Instruments. The chattel
paper, documents and instruments of Debtor pledged hereunder have only
one original counterpart and no party other than Debtor or Senior
Lender is in actual or constructive possession of any such chattel
paper, documents or instruments.
(l) Securities. Any certificates evidencing Securities are
valid and genuine and have not been altered. All Securities have been
duly authorized and validly issued, are fully
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paid and non-assessable, and were not issued in violation of the
preemptive rights of any party or of any agreement by which Debtor or
the issuer thereof is bound. No restrictions or conditions exist with
respect to the transfer or voting of any Securities, except as has been
disclosed to Secured Party in writing. To the best of Debtor's
knowledge, no issuer of any of the Securities (other than those that
are publicly traded) has any outstanding stock rights, rights to
subscribe, options, warrants or convertible securities outstanding or
any other rights outstanding entitling any party to have issued to such
party capital stock of such issuer, except as has been disclosed to
Secured Party in writing.
5. Affirmative Covenants. Debtor will comply with the covenants
contained in this Section 5 at all times during the period of time this
Agreement is effective unless Secured Party shall otherwise consent in writing.
(a) Ownership and Liens. Debtor will maintain good and
marketable title to all Collateral free and clear of all liens,
security interests, encumbrances or adverse claims, except for the
security interest created by this Agreement and the security interests
and other encumbrances securing the Senior Debt. Debtor will not permit
any dispute, right of setoff, counterclaim or defense to exist with
respect to all or any part of the Collateral. Debtor will cause any
financing statement or other security instrument with respect to the
Collateral to be terminated, except as may exist or as may have been
filed in favor of Secured Party or the Senior Lender.
(b) Further Assurances. Debtor will from time to time at its
expense promptly execute and deliver all further instruments and
documents and take all further action necessary or appropriate or that
Secured Party may request in order (i) to perfect and protect the
security interest created or purported to be created hereby, (ii) to
enable Secured Party to exercise and enforce its rights and remedies
hereunder in respect of the Collateral, and (iii) to otherwise effect
the purposes of this Agreement, including without limitation: (A)
executing and filing such financing or continuation statements, or
amendments thereto; and (B) furnishing to Secured Party from time to
time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral,
all in reasonable detail satisfactory to Secured Party.
(c) Inspection of Collateral. Debtor will keep adequate
records concerning the Collateral and will permit Secured Party and all
representatives and agents appointed by Secured Party to inspect any of
the Collateral and the books and records of or relating to the
Collateral at any time during normal business hours, to make and take
away photocopies, photographs and printouts thereof and to write down
and record any such information.
(d) Payment of Taxes. Debtor (i) will timely pay all property
and other taxes, assessments and governmental charges or levies imposed
upon the Collateral or any part thereof, (ii) will timely pay all
lawful claims which, if unpaid, might become a lien or charge upon the
Collateral or any part thereof, and (iii) will maintain appropriate
accruals and reserves for all such liabilities in a timely fashion in
accordance with generally accepted accounting principles. Debtor may,
however, delay paying or discharging any such taxes, assessments,
charges, claims or liabilities so long as the validity thereof is
contested in good
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faith by proper proceedings and provided Debtor has set aside on
Debtor's books adequate reserves therefor.
(e) Condition of Goods. Debtor will maintain, preserve,
protect and keep all Collateral which constitutes goods in good
condition, repair and working order and will cause such Collateral to
be used and operated in good and workmanlike manner, in accordance with
applicable laws and in a manner which will not make void or cancelable
any insurance with respect to such Collateral.
(f) Insurance. Debtor will, at its own expense, maintain
insurance with respect to all Collateral which constitutes goods in
such amounts, against such risks, in such form and with such insurers,
as shall be satisfactory to Senior Lender from time to time.
(g) Accounts and General Intangibles. Debtor will, except as
otherwise provided in Subsection 7(e), collect, at Debtor's own
expense, all amounts due or to become due under each of the accounts
and general intangibles. Debtor will also duly perform and cause to be
performed all of its obligations with respect to the goods or services,
the sale or lease or rendition of which gave rise or will give rise to
each account and all of its obligations to be performed under or with
respect to the general intangibles.
6. Negative Covenants. Debtor will comply with the covenants contained
in this Section 6 at all times during the period of time this Agreement is
effective, unless Secured Party shall otherwise consent in writing.
(a) Transfer or Encumbrance. Other than in the ordinary course
of business, Debtor will not (i) sell, assign (by operation of law or
otherwise), transfer, exchange, lease or otherwise dispose of any of
the Collateral, (ii) ▇▇▇▇▇ ▇ ▇▇▇▇ or security interest in or execute,
file or record any financing statement or other security instrument
with respect to the Collateral to any party other than Secured Party or
Senior Lender, or (iii) deliver actual or constructive possession of
any of the Collateral to any party other than Secured Party or Senior
Lender, except for (A) sales and leases of inventory and licensing of
software and intellectual property rights in the ordinary course of
business, and (B) the sale or other disposal of any item of equipment
which is worn out or obsolete; provided, however, the exceptions
permitted in clauses (A) and (B) above shall automatically terminate
upon the occurrence of an Event of Default.
(b) Impairment of Security Interest. Debtor will not take or
fail to take any action which would in any manner impair the value or
enforceability of Secured Party's security interest in any Collateral.
(c) Possession of Collateral. Debtor will not cause or permit
the removal of any Collateral from its possession, control and risk of
loss, nor will Debtor cause or permit the removal of any Collateral
from the address on the first page hereof other than (i) as permitted
by Subsection 6(a), or (ii) in connection with the possession of any
Collateral by Secured Party, Senior Lender or by their bailee.
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(d) Goods. Debtor will not permit any Collateral which
constitutes goods to at any time (i) be covered by any document except
documents in the possession of the Senior Lender, (ii) become so
related to, attached to or used in connection with any particular real
property so as to become a fixture upon such real property, or (iii) be
installed in or affixed to other goods so as to become an accession to
such other goods unless such other goods are subject to a security
interest under this Agreement.
(e) Compromise of Collateral. Debtor will not adjust, settle,
compromise, amend or modify any Collateral, except an adjustment,
settlement, compromise, amendment or modification in good faith and in
the ordinary course of business.
(f) Financing Statement Filings. Debtor recognizes that
financing statements pertaining to the Collateral have been or may be
filed where Debtor maintains any Collateral, has its records concerning
any Collateral or has its residence or chief executive office, as the
case may be. Without limitation of any other covenant herein, Debtor
will not cause or permit any change in the location of (i) any
Collateral, (ii) any records concerning any Collateral, or (iii)
Debtor's chief executive office to a jurisdiction other than as
represented in Subsection 4(g) unless Debtor shall have notified
Secured Party in writing of such change at least thirty (30) days prior
to the effective date of such change, and shall have first taken all
action required by Secured Party for the purpose of further perfecting
or protecting the security interest in favor of Secured Party in the
Collateral. In any written notice furnished pursuant to this
Subsection, Debtor will expressly state that the notice is required by
this Agreement and contains facts that may require additional filings
of financing statements or other notices for the purpose of continuing
perfection of Secured Party's security interest in the Collateral.
7. Rights of Secured Party. Secured Party shall have the rights
contained in this Section 7 at all times during the period of time this
Agreement is effective.
(a) Additional Financing Statements Filings. Debtor hereby
authorizes Secured Party to file, without the signature of Debtor, one
or more financing or continuation statements, and amendments thereto,
relating to the Collateral. Debtor further agrees that a carbon,
photographic or other reproduction of this Security Agreement or any
financing statement describing any Collateral is sufficient as a
financing statement and may be filed in any jurisdiction Secured Party
may deem appropriate.
(b) Power of Attorney. Debtor hereby irrevocably appoints
Secured Party as Debtor's attorney-in-fact, such power of attorney
being coupled with an interest, with full authority in the place and
stead of Debtor and in the name of Debtor or otherwise, after the
occurrence of an Event of Default and subject to the provisions of the
Debtor's obligations to Senior Lender, to take any action and to
execute any instrument which Secured Party may deem necessary or
appropriate to accomplish the purposes of this Agreement, including
without limitation: (i) to obtain and adjust insurance required by
Secured Party hereunder; (ii) to demand, collect, ▇▇▇ for, recover,
compound, receive and give acquittance and receipts for moneys due and
to become due under or in respect of the Collateral; (iii) to receive,
endorse and collect any drafts or other instruments, documents and
chattel paper in connection with clause (i) or (ii) above; and (iv) to
file any claims or take any action or
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institute any proceedings which Secured Party may deem necessary or
appropriate for the collection and/or preservation of the Collateral or
otherwise to enforce the rights of Secured Party with respect to the
Collateral.
8. Events of Default. Each of the following constitutes an "Event of
Default" under this Agreement:
(a) Default in Payment. The failure, refusal or neglect of
Debtor to repay the Indebtedness, as the same shall become due and
payable, and such failure, refusal or neglect to repay the Indebtedness
when due and payable remains unremedied for a period of thirty (30)
days after notice of such failure, refusal or neglect is given by
Secured Party; or
(b) Non-Performance of Covenants. The failure (other than as
referred to in subsection (a) above) of Debtor to timely and properly
observe, keep or perform any covenant, agreement, warranty or condition
required herein and such failure remains unremedied for a period of
thirty (30) days after notice of such failure is given by Secured Party
to Debtor; or
(c) Debtor's Bankruptcy or Insolvency. If Debtor (i) becomes
insolvent, or makes a transfer in fraud of creditors, or makes an
assignment for the benefit of creditors, or admits in writing its
inability to pay its debts as they become due; (ii) generally is not
paying its debts as such debts become due; (iii) has a receiver,
trustee or custodian appointed for, or take possession of, all or
substantially all of the assets of such party or any of the Collateral,
either in a proceeding brought by such party or in a proceeding brought
against such party and such appointment is not discharged or such
possession is not terminated within ninety (90) days after the
effective date thereof or such party consents to or acquiesces in such
appointment or possession; (iv) files a petition for relief under the
United States Bankruptcy Code or any other present or future federal or
state insolvency, bankruptcy or similar laws (all of the foregoing
hereinafter collectively called "Applicable Bankruptcy Law") or an
involuntary petition for relief is filed against such party under any
Applicable Bankruptcy Law and such involuntary petition is not
dismissed within ninety (90) days after the filing thereof, or an order
for relief naming such party is entered under any Applicable Bankruptcy
Law, or any composition, rearrangement, extension, reorganization or
other relief of debtors now or hereafter existing is requested or
consented to by such party; or (v) fails to have discharged within a
period of ninety (90) days any attachment, sequestration or similar
writ levied upon any property of such party.
9. Remedies and Related Rights. If an Event of Default shall have
occurred, and without limiting any other rights and remedies provided herein, or
otherwise available to Secured Party, but subject to the provisions of the
rights of Senior Lender under the Senior Debt, Secured Party may exercise one or
more of the rights and remedies provided in this Section.
(a) Remedies. Secured Party may from time to time at its
discretion, without limitation and without notice except as expressly
provided herein:
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(i) exercise in respect of the Collateral all the
rights and remedies of a secured party under the Code (whether
or not the Code applies to the affected Collateral);
(ii) require Debtor to, and Debtor hereby agrees that
it will at its expense and upon request of Secured Party,
assemble the Collateral as directed by Secured Party and make
it available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to both parties;
(iii) reduce its claim to judgment or foreclose or
otherwise enforce, in whole or in part, the security interest
granted hereunder by any available judicial procedure;
(iv) sell or otherwise dispose of, at its office, on
the premises of Debtor or elsewhere, the Collateral, as a unit
or in parcels, by public or private proceedings, and by way of
one or more contracts (it being agreed that the sale or other
disposition of any part of the Collateral shall not exhaust
Secured Party's power of sale, but sales or other dispositions
may be made from time to time until all of the Collateral has
been sold or disposed of or until the Indebtedness has been
paid and performed in full), and at any such sale or other
disposition it shall not be necessary to exhibit any of the
Collateral;
(v) buy the Collateral, or any portion thereof, at
any public sale;
(vi) buy the Collateral, or any portion thereof, at
any private sale if the Collateral is of a type customarily
sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations;
(vii) apply for the appointment of a receiver for the
Collateral, and Debtor hereby consents to any such
appointment; and
(viii) at its option, retain the Collateral in
satisfaction of the Indebtedness whenever the circumstances
are such that Secured Party is entitled to do so under the
Code or otherwise.
Debtor agrees that in the event Debtor is entitled to receive any notice under
the Uniform Commercial Code, as it exists in the state governing any such
notice, of the sale or other disposition of any Collateral, reasonable notice
shall be deemed given when such notice is deposited in a depository receptacle
under the care and custody of the United States Postal Service, postage prepaid,
at Debtor's address set forth on the first page hereof, ten (10) days prior to
the date of any public sale, or after which a private sale, of any of such
Collateral is to be held. Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
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(b) Private Sale of Securities. Debtor recognizes that Secured
Party may be unable to effect a public sale of all or any part of the
Securities because of restrictions in applicable federal and state
securities laws and that Secured Party may, therefore, determine to
make one or more private sales of any of the Securities to a restricted
group of purchasers who will be obligated to agree, among other things,
to acquire any of the Securities for their own account, for investment
and not with a view to the distribution or resale thereof. Debtor
acknowledges that each any such private sale may be at prices and other
terms less favorable than what might have been obtained at a public
sale and, notwithstanding the foregoing, agrees that each such private
sale shall be deemed to have been made in a commercially reasonable
manner and that Secured Party shall have no obligation to delay the
sale of any of the Securities for the period of time necessary to
permit the issuer to register such Securities for public sale under any
federal or state securities laws. Debtor further acknowledges and
agrees that any offer to sell such Securities which has been made
privately in the manner described above to not less than five (5) bona
fide offerees shall be deemed to involve a "public sale" for the
purposes of Section 9.504(c) of the Code, notwithstanding that such
sale may not constitute a "public offering" under any federal or state
securities laws and that Secured Party may, in such event, bid for the
purchase of such Securities.
(c) Application of Proceeds. If any Event of Default shall
have occurred, Secured Party may at its discretion apply or use any
cash held by Secured Party as Collateral, and any cash proceeds
received by Secured Party in respect of any sale or other disposition
of, collection from, or other realization upon, all or any part of the
Collateral as follows in such order and manner as Secured Party may
elect:
(i) to the repayment or reimbursement of the
reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred by Secured
Party in connection with (A) the administration of the Loan
Documents, (B) the custody, preservation, use or operation of,
or the sale of, collection from, or other realization upon,
the Collateral, and (C) the exercise or enforcement of any of
the rights and remedies of Secured Party hereunder;
(ii) to the payment or other satisfaction of any
liens and other encumbrances upon the Collateral;
(iii) to the satisfaction of the Indebtedness;
(iv) to the payment of any other amounts required by
applicable law (including without limitation, Section
9.504(a)(3) of the Code or any other applicable statutory
provision); and
(v) by delivery to Debtor or any other party lawfully
entitled to receive such cash or proceeds whether by direction
of a court of competent jurisdiction or otherwise.
(d) Deficiency. In the event that the proceeds of any sale of,
collection from, or other realization upon, all or any part of the
Collateral by Secured Party are insufficient to pay all amounts to
which Secured Party is legally entitled, Debtor and any party who
guaranteed
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or is otherwise obligated to pay all or any portion of the Indebtedness
shall be liable for the deficiency, together with interest thereon as
provided in the Loan Documents.
(e) Non-Judicial Remedies. In granting to Secured Party the
power to enforce its rights hereunder without prior judicial process or
judicial hearing, Debtor expressly waives, renounces and knowingly
relinquishes any legal right which might otherwise require Secured
Party to enforce its rights by judicial process. Debtor recognizes and
concedes that non-judicial remedies are consistent with the usage of
trade, are responsive to commercial necessity and are the result of a
bargain at arm's length. Nothing herein is intended to prevent Secured
Party or Debtor from resorting to judicial process at either party's
option.
(f) Other Recourse. Debtor waives any right to require Secured
Party to proceed against any third party, exhaust any Collateral or
other security for the Indebtedness, or to have any third party joined
with Debtor in any suit arising out of the Indebtedness or any of the
Loan Documents, or pursue any other remedy available to Secured Party.
Debtor further waives any and all notice of acceptance of this
Agreement and of the creation, modification, rearrangement, renewal or
extension of the Indebtedness. Debtor further waives any defense
arising by reason of any disability or other defense of any third party
or by reason of the cessation from any cause whatsoever of the
liability of any third party. Until all of the Indebtedness shall have
been paid in full, Debtor shall have no right of subrogation and Debtor
waives the right to enforce any remedy which Secured Party has or may
hereafter have against any third party, and waives any benefit of and
any right to participate in any other security whatsoever now or
hereafter held by Secured Party. Debtor authorizes Secured Party, and
without notice or demand and without any reservation of rights against
Debtor and without affecting Debtor's liability hereunder or on the
Indebtedness to (i) take or hold any other property of any type from
any third party as security for the Indebtedness, and exchange,
enforce, waive and release any or all of such other property, (ii)
apply such other property and direct the order or manner of sale
thereof as Secured Party may in its discretion determine, (iii) renew,
extend, accelerate, modify, compromise, settle or release any of the
Indebtedness or other security for the Indebtedness, (iv) waive,
enforce or modify any of the provisions of any of the Loan Documents
executed by any third party, and (v) release or substitute any third
party.
10. INDEMNITY. DEBTOR HEREBY INDEMNIFIES AND AGREES TO HOLD HARMLESS
SECURED PARTY, AND ITS REPRESENTATIVES (EACH AN "INDEMNIFIED PERSON") FROM AND
AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, CLAIMS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY
KIND OR NATURE (COLLECTIVELY, THE "CLAIMS") WHICH MAY BE IMPOSED ON, INCURRED
BY, OR ASSERTED AGAINST, ANY INDEMNIFIED PERSON ARISING IN CONNECTION WITH THE
LOAN DOCUMENTS, THE INDEBTEDNESS OR THE COLLATERAL (INCLUDING WITHOUT
LIMITATION, THE ENFORCEMENT OF THE LOAN DOCUMENTS AND THE DEFENSE OF ANY
INDEMNIFIED PERSON'S ACTIONS AND/OR INACTIONS IN CONNECTION WITH THE LOAN
DOCUMENTS) PROVIDED THAT NO INDEMNIFIED PERSON SHALL BE INDEMNIFIED HEREUNDER
FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. THE PARTIES ACKNOWLEDGE THAT
THE INDEMNIFICATION
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PROVIDED FOR IN THIS SECTION SHALL BE PERMITTED IN THE EVENT OF THE NEGLIGENCE
(BUT NOT GROSS NEGLIGENCE) OF AN INDEMNIFIED PERSON. THE INDEMNIFICATION
PROVIDED FOR IN THIS SECTION SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND
SHALL EXTEND AND CONTINUE TO BENEFIT EACH INDIVIDUAL OR ENTITY WHO IS OR HAS AT
ANY TIME BEEN AN INDEMNIFIED PERSON HEREUNDER.
11. Miscellaneous.
(a) Entire Agreement. This Agreement and the other Loan
Documents contain the entire agreement of Secured Party and Debtor with
respect to the Collateral. If the parties hereto are parties to any
prior agreement, either written or oral, relating to the Collateral,
the terms of this Agreement shall amend and supersede the terms of such
prior agreements as to transactions on or after the effective date of
this Agreement, but all security agreements, financing statements,
guaranties, other contracts and notices for the benefit of Secured
Party shall continue in full force and effect to secure the
Indebtedness unless Secured Party specifically releases its rights
thereunder by separate release.
(b) Amendment. No modification, consent or amendment of any
provision of this Agreement or any of the other Loan Documents shall be
valid or effective unless the same is in writing and signed by the
party against whom it is sought to be enforced.
(c) Actions by Secured Party. The lien, security interest and
other security rights of Secured Party hereunder shall not be impaired
by (i) any renewal, extension, increase or modification with respect to
the Indebtedness, (ii) any surrender, compromise, release, renewal,
extension, exchange or substitution which Secured Party may grant with
respect to the Collateral, or (iii) any release or indulgence granted
to any endorser, guarantor or surety of the Indebtedness. The taking of
additional security by Secured Party shall not release or impair the
lien, security interest or other security rights of Secured Party
hereunder or affect the obligations of Debtor hereunder.
(d) Waiver by Secured Party. Secured Party may waive any Event
of Default without waiving any other prior or subsequent Event of
Default. Secured Party may remedy any default without waiving the Event
of Default remedied. Neither the failure by Secured Party to exercise,
nor the delay by Secured Party in exercising, any right or remedy upon
any Event of Default shall be construed as a waiver of such Event of
Default or as a waiver of the right to exercise any such right or
remedy at a later date. No single or partial exercise by Secured Party
of any right or remedy hereunder shall exhaust the same or shall
preclude any other or further exercise thereof, and every such right or
remedy hereunder may be exercised at any time. No waiver of any
provision hereof or consent to any departure by Debtor therefrom shall
be effective unless the same shall be in writing and signed by Secured
Party and then such waiver or consent shall be effective only in the
specific instances, for the purpose for which given and to the extent
therein specified. No notice to or demand on Debtor in any case shall
of itself entitle Debtor to any other or further notice or demand in
similar or other circumstances.
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(e) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND
APPLICABLE FEDERAL LAWS, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT
OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS.
(f) Venue. This Agreement has been entered into in the county
in Texas where Secured Party's address for notice purposes is located,
and it shall be performable for all purposes in such county. Courts
within the State of Texas shall have jurisdiction over any and all
disputes arising under or pertaining to this Agreement and venue for
any such disputes shall be in the county or judicial district where
this Agreement has been executed and delivered.
(g) Severability. If any provision of this Agreement is held
by a court of competent jurisdiction to be illegal, invalid or
unenforceable under present or future laws, such provision shall be
fully severable, shall not impair or invalidate the remainder of this
Agreement and the effect thereof shall be confined to the provision
held to be illegal, invalid or unenforceable.
(h) No Obligation. Nothing contained herein shall be construed
as an obligation on the part of Secured Party to extend or continue to
extend credit to Debtor.
(i) Notices. All notices, requests, demands or other
communications required or permitted to be given pursuant to this
Agreement shall be in writing and given by (i) personal delivery, (ii)
expedited delivery service with proof of delivery, or (iii) United
States mail, postage prepaid, registered or certified mail, return
receipt requested, sent to the intended addressee at the address set
forth on the first page hereof or to such different address as the
addressee shall have designated by written notice sent pursuant to the
terms hereof and shall be deemed to have been received either, at the
time of personal delivery, or as of the date of first attempted
delivery at the address and in the manner provided herein, during
normal business hours. Either party shall have the right to change its
address for notice hereunder to any other location within the
continental United States by notice to the other party of such new
address at least thirty (30) days prior to the effective date of such
new address.
(j) Binding Effect and Assignment. This Agreement (i) creates
a continuing security interest in the Collateral, (ii) shall be binding
on Debtor and the successors and assigns of Debtor, and (iii) shall
inure to the benefit of Secured Party and its successors and assigns.
Debtor's rights and obligations hereunder may not be assigned or
otherwise transferred without the prior written consent of Secured
Party.
(k) Cumulative Rights. All rights and remedies of Secured
Party hereunder are cumulative of each other and of every other right
or remedy which Secured Party may otherwise have at law or in equity or
under any of the other Loan Documents, and the exercise of one or more
of such rights or remedies shall not prejudice or impair the concurrent
or subsequent exercise of any other rights or remedies.
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(l) Gender and Number. Within this Agreement, words of any
gender shall be held and construed to include the other gender, and
words in the singular number shall be held and construed to include the
plural and words in the plural number shall be held and construed to
include the singular, unless in each instance the context requires
otherwise.
(m) Descriptive Headings. The headings in this Agreement are
for convenience only and shall in no way enlarge, limit or define the
scope or meaning of the various and several provisions hereof.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY.]
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EXECUTED as of the date first written above.
DEBTOR:
MIGRATEC, INC.
By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
President
SECURED PARTY:
MT PARTNERS, L.P.
By: CARDINAL HOLDING CORPORATION
General Partner
By:
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇, President
MERCURY FUND NO. 1, LTD.
By: MERCURY VENTURES, LTD.
General Partner
By: MERCURY MANAGEMENT, L.L.C.
General Partner
By:
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▇▇▇▇▇ ▇▇▇▇, Manager
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